What this unit covers
Read a balance sheet as a simple snapshot of what a company owns and owes on one date.
By the end you will be able to
- Explain a balance sheet as a snapshot of what is owned and owed on one date.
- Identify assets, liabilities and equity, and calculate equity as assets minus liabilities.
- Recognise that one snapshot is a useful input, not a complete judgment.
How it starts: What Is Actually Left Over
- Someone asks if you are doing okay financially right now.
- You realise you have never listed your savings against your loans.
- What would that honest number actually look like?
Words you will meet
- Balance Sheet
- A statement showing what a company owns and owes on one specific date.
- Assets
- Everything of value a company owns, such as cash, stock and machinery.
- Liabilities
- Everything a company owes to others, such as loans and unpaid bills.
- Equity
- What genuinely belongs to the owners, found by subtracting liabilities from assets.
In this module: Reading Financial Statements
- Balance Sheet Made Easy (this unit)
- Profit & Loss Statement
- Cash Flow Statement
- Connecting All Three Statements
Sign in to unlock Level 3.
Sign in